Research News

Faculty of Business Administration, Mr. Muhammad Sharia

Mr. Mohammed was attended a conference about the

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promotion of tripartite partnership between government, industry and academic sector which was held at the University of Polytechnic and presented a paper entitled of "The Impact of Creativity and Innovation on Creating a Competitive Advantage to the Palestinian Stone and Marble Sector"

Executive Summary

The stone and marble industry in Palestine is underlying under the modest economic stage called "natural talents";categorized by the availability of raw material, semi-skilled labor force, un-encouraging environment and poor managerial, technical and marketing abilities for the working firms, it is also categorized by the severe competition between the rivalry firms mainly in pricing. The similarities between these firms are high in terms of production lines, products and services.

This research aims at providing tools and mechanisms to improve the status of stone and marble industry, by shifting from the "natural talent" state to the "innovation and creativity" states; which implies providing a healthy working environment, change in production techniques, management and marketing methodologies, the level of availability of the required infrastructure, infusion of information and communication technologies, the cooperation of the supportive institutions and the emergence of new ways of thinking and decision making, as well as the creation of new challenging organizational culture and inducing the differentiation and creative strategies.

This research evolves from the importance of transforming the Palestinian industries from being totally dependent over the Israeli economy to be transformed into the gradual de-annexing stage, by constructing the independence stage and achieving a competitive advantage to the Palestinian industries leading to the thrive of the economic process; sustaining prosperity and welfare to the people.

A lot of cooperative efforts are still needed to be exerted, in order to ensure the shifting toward the "innovation and creativity" state in the stone and marble industry, imperatively between the private sectors, represented in governmental institutions and the academic institutions. Such partnership - once established - shall induce a greater impact on the competitive advantage of the industry and the competitive advantage of the companies.

The research will focus on the main impediments obstructing the achievement of the competitive advantage as a (prevailing sustainable phenomenon); by introducing Porter`s models of competitive advantage, and assessing these models with regard to the Palestinian industry.

The paper consists four chapters: introduction, theoretical frame work, analysis and findings and conclusions in addition to the annexes and references. After the reviewing of the available literature; the study tool consisted of a questionnaire distributed amongst a sample of 60 factories covering north, middle and south regions of the West Bank, personal interviews were also conducted to this representative of  10% sample of  from the industrial community in the West Bank.

The research was based on the following question as a basic assumption, that is; what tools are needed to build a national competitive advantage for stone and marble industry? To prove this the following sub questions have to be answered:

• What is the general environment of the industry; production conditions, demand conditions, support industries and institutions, and the five generic forces?
• What is the working strategy at the firm's side; cost leadership, differentiation, or focus strategy.
• What is the balance scorecard (the competitive advantage) of the firms look like?
• What is the application of information and communication technologies on the sector; usage of computers, usage of internet applications, the impact on the firm`s performance.
• What is the demographic information of these firms?

According to the recited literature, it was obvious that there were two different views regarding the Palestinian competitive advantage. The first implies that the availability of the attractive color raw material represents the competitive advantage. The second view indicates that competitive advantage can be achieved via proper interaction of accumulated experience and knowledge with competent human resources. They mentioned Japan as a good example of this view.

SWOT analysis tool was used to point out the strengths and weaknesses of the industry, as well as the available opportunities and threats. The following factors were envisaged as possible factors that encourage or impede the achievement of the competitive advantage:

• Evaluation of production factors
• Demand on products
• Financial growth
• Accumulation of expertise and knowledge
• The products market share
• Usage of internet and ICT
• Internal organization of firms
• Human resources
• Support environment

Important recommendations:

1. Simplifying the rules and regulations related to the industry, taking into account that the vast majority of the industry is categorized as family owned and managed small and medium size businesses.
2. Providing and developing the infrastructure facilities and utilities at reasonable prices and adequate quantities and qualities. This might include; electricity, water, recycling, geographic mapping, standards and roads.
3. Building up the human capacities through training, maintenance and laboratory testing.
4. Developing lending institutions and making easy access to finance.
5. Encourage the diffusion of ICT into the different business functions of the industry, i.e. production, marketing, selling, management, inventory, book keeping, etc.
6. Encouraging the strategic cooperation and clustering in the industry.

Clustering will help building the competitive advantage through the following measures:

• Promoting innovation and creativity
• Improving the image of the Palestinian industry
• Increasing exports
• Improving the infrastructure and decreasing costs
• Information seeking and provision
• Enhancing the work environment

Despite the presence of some programs, endeavoring to help this industry during the past 12 years; the absence of comprehensive a national strategy to improve the performance of this industry was prevailing.  It is highly recommended to build a national team to develop this industry through crafting a national business strategy for the sector, guiding its vision and developmental strategies for the coming decade. This team could be comprised of; Ministry of National Economy, Union of Stone and Marble, Palestine Trade Center (Pal-trade), Palestinian Federation of Industries, Academic Institutions, Ministry of Finance, Ministry of Local Government, Ministry of Planning and some experts.